Dáil Éireann díospóireacht -
Wednesday, 9 Dec 1998

Vol. 498 No. 2

Financial Resolutions, 1998. - Financial Resolution No. 5: General (Resumed).

Debate resumed on the following motion:

THAT it is expedient to amend the law relating to inland revenue (including value-added tax and excise) and to make further provision in connection with finance.

—(Minister for Public Enterprise)

Mr. Broughan

The general circumstances surrounding the preparation of budget 1999 were the most favourable ever. Never before was a Minister in the position of having an opening surplus of £1.4 billion or a general Government surplus of almost £1 billion in a period of very low inflation and a competitive economy. The Minister could also look ahead to the next five or six years of accumulated surpluses of up to £10 billion. The Minister had a major opportunity to make a definitive attack on social exclusion and the huge levels of poverty in our society. Instead, he decided to concentrate some resources in terms of taxation on the most deserving people, as he perceived them.

The Minister's increases in social welfare are a further miserable sop for the one million or more people who live below the poverty line. The absolute rate of social welfare is disgraceful, given the cost of living. I welcome the £3 and £6 increases for senior citizens. The increase in unemployment assistance, however, from £70.50 to £73.50 is utterly disgraceful. The increase in payments for dependants from £41.20 to £43.20 is also disgraceful. I wonder when those dependants will organise themselves as a lobby to inquire why they should not receive at least the same amount as the main social welfare recipient in the family. The Minister argues that having allowed the first £100 earned per week tax free to workers, he must maintain a divergence between them and social welfare recipients. No such excuse can be accepted in regard to rates for survivors' pensions, currently £77.10, invalidity payments at £75.20 or disability allowance at £73.50. When one considers these payments and the one-parent family, blind and supplementary welfare allowances, one can only conclude that the parties which run this House now and in the past — primarily the conservative Fianna Fáil and Fine Gael parties — do not give a damn about a large group of people in our society. My colleague, Deputy Michael D. Higgins, is currently writing about the duties of citizenship. Any proper democracy which regards inclusive citizenship as an essential element in its make-up would regard this plethora of social welfare rates as a disgrace.

On the issue of social exclusion, I was glad to see the Minister included some important projects in some of the more deprived areas. I welcome the fact he listened to lengthy representations from me in regard to the Darndale/Belcamp community. Twenty five years after the community was established, community facilities are eventually being provided. There was a £700,000 shortfall for the project and I welcome the fact that the Minister, following representations I made to the Taoiseach and the Minister for Tourism, Sport and Recreation, has decided to provide the money this year. Some of the representatives from Darndale and Belcamp will visit Lenister House today to expedite the project.

The unemployment figure currently stands at about 211,000 or 7.8 per cent. Two-thirds of the 95,000 jobs created last year for which the Minister for Enterprise, Trade and Employment, Deputy Harney, claimed credit are part-time, particularly in service industries. This highlights the urgent necessity to introduce a national minimum wage long before April 2000.

Like many others on this side of the House, I am disappointed with the measures introduced in the budget to reduce the long-term unemployment figure which currently stands at about 70,000. A sum of £25 million is to be made available to create 7,000 skilled places and £2.5 million for 40 jobs clubs. As Labour and Social Democratic parties hold power in 13 of the 15 member states of the European Union, the Minister had no option but to cobble together an employment action plan for which she has provided no extra resources.

The local employment service has been extremely successful on the north side of Dublin in providing mentor and other programmes. It should be extended to other areas as soon as possible. The possibility of integrating it with local FÁS offices should be considered.

To remove some of the under 25s from the unemployment register the resources available for the over 25s, particularly the over 35s who find it difficult to return to full-time employment in the trades and applications for which they were trained, have had to be reduced. The Minister did not succeed, therefore, in securing the necessary resources in the battles at the Cabinet table to target the long-term unemployed, particularly in unemployment blackspots.

There are now 1.7 million in the workforce which continues to expand. In some areas there are labour shortages. To meet demand it has been suggested that women in the home should be encouraged to return to the workforce. It is projected that women in the home will account for most of the increase in the workforce up to 2011.

The expert working group established under Partnership 2000 has made interim recommendations on child care. It has recommended that there should be tax relief of up to £4,000 per child for vouched child care expenses. It has also recommended that child benefit should be increased. The Government granted an increase of £3 in the budget in respect of the first and second child. While cre ches will not be subject to benefit-in-kind and capital allowances may be written off, the Minister for Finance has refused to consider any of the key recommendations of the working group which would cost up to £70 million to implement. This is unacceptable.

I do not have time to deal with the housing, education and health care aspects of the budget which — to use a hackneyed phrase — was a missed opportunity.

Mr. Bradford

I thank Deputy Broughan for sharing time with me. In the time available it is not possible to deal in great detail with the measures announced in the budget which was welcomed with euphoria by Government backbenchers. As Deputy Broughan said, it was a missed opportunity, although there are aspects which are welcome. This is the least one would expect and demand given the huge sum available to the Government. The question is whether it has acted in the long-term interests of the country as a whole.

The Minister for Finance informed us that he had made the tough decision to put money away for a rainy day. When one looks at the increases in social welfare and what has been done for those on hospital waiting lists and local authority housing lists one has to ask if this is a Government that has declared war on poverty. While no one can argue that the PAYE taxpayer is entitled to relief, one has to ask what could have been done to resolve the problems in health, education, housing and child care. On each of these crucial issues the Government had a choice. It decided not to deal with them in a constructive way.

On the health crisis, extra funds have been allocated but it is too little too late for the tens of thousands on hospital waiting lists. While we would all like to have a little more in our pockets, we would also like the health service to respond immediately to the needs of patients, be they public or private. We would also like the education service to meet the needs of the marginalised and the disadvantaged through the provision of remedial teachers and specialised services.

Everybody would like to see the problems of escalating house prices and local authority waiting lists addressed. These priorities have been ignored in the short term by the Government at a time when hundreds of millions of pounds was available. It does not bode well for the inevitable rainy days ahead.

There should have been a better attack on the health crisis and further funding should have been made available to education and to deal with the housing crisis. The Minister of State at the Department of the Environment and Local Government with responsibility for housing, Deputy Molloy, made an announcement a few weeks ago regarding extra provisions in his Department. We were told that 600 extra local authority houses would be built. This is an apparently impressive stand alone figure, yet given the state of the housing lists in every town and county, it will make no impact. While the crisis cannot be solved in one budget, I appeal to the Minster for Finance and the Minister of State, Deputy Molloy, to look at the urgent need for extra funding for local authority housing and other methods of addressing the issue. It is of little consolation to give a worker at the bottom of the PAYE scale £3 to £6 per week extra if he or she has inadequate accommodation and does not have access to proper housing.

I support Deputy Broughan's comments on child care. Is the Government engaged in an ideological debate on the issue? We must accept the realities of modern life. In most houses both partners must work because of mortgages of £80,000, £100,000 or £150,000 and huge financial commitments. We have a duty to provide financial support for these families so that proper child care facilities can be provided. We talk about the need for the Government to be pro-family and we pride ourselves for being a pro-family State. However, it is anti-family to ignore the issue of child care. Much more needs to be done here. We must ensure that where a spouse wants to work or has no choice in the matter, sufficient assistance is available for the cost of child care. That would be a proper step in the provision of a mechanism to deal with the issue.

Over the past five or six years the motor industry has benefited greatly from progress in the economy, but it did so because the Government responded to the industry's view, expressed for at least the previous decade, that if taxes were reduced the motorist would respond by buying newer and better cars, that extra revenues would be brought into the Government coffers, that more people would be employed in the motor industry and that dangerous cars would be taken off the road. When the Government introduced the scrappage scheme and made it easier to buy new cars the public responded. New car sales have reached record levels, more jobs were created in the industry and the Revenue has benefited accordingly.

To everybody's surprise policy has now been reversed. The Minister for Finance said the increase in VRT was an environmental measure. However, it is mistaken and I hope he will revisit the proposal. It will not take any old cars off the road. People will buy second hand rather than new cars and jobs will be lost in the industry. Every Minister makes mistakes in his budget that leave a negative impact of some kind. The attack on the motor industry is an example and the proposal should be reversed.

Minister for Agriculture and Food (Mr. Walsh)

I wish to share my time with Deputy Pat Carey.

An Ceann Comhairle

Is that agreed? Agreed.

Mr. Walsh

I am pleased to have the opportunity to contribute to this budget debate. This has been a landmark budget. It is comprehensive, progressive, developmental and caring. The Minister for Finance deserves all our thanks for the prudent way in which he managed the national finances over the past year and a half. It left him in a position to allocate the resources available to him. In doing so, he succeeded in producing a fair and balanced budget and he used the opportunity to be most helpful to those most in need.

The resources were available to the Minister because workers worked hard over recent years, management was progressive and professional and the trade union movement was responsible and always had the best interests of its members at heart. Employers and farmers took the same approach. Our good economic performance has resulted mainly from the structure of partnership Government and the partnerships programmes, which have been exceptionally positive and successful over the past decade.

The budget is important to every sector of the economy. The agri-food sector has been given a very generous allocation, which is very welcome in view of the difficult times experienced by agriculture and farming over the past few months. The budget will contribute to and maintain national economic growth generally, while also ensuring that we care for those most in need. It is a difficult task to strike the right balance, but the Minister for Finance is to be commended for his efforts in this regard.

We are all aware of the difficulties faced by the agri-food sector in the past few months. There were two primary causes: the collapse of the Russian market and the very difficult weather. Ireland depends to an inordinate extent — up to 85 to 90 per cent — on foreign markets and lost out, especially on the Russian market. That was compounded by the fact that our EU partners also lost this valuable export market, thus resulting in our having to compete strongly on the EU market. The international markets for pigmeat also suffered badly, not just from the Russian crisis but also from the effects of the weakness in the Asian markets and a serious general oversupply in the EU pigmeat markets. This meant that the cattle, beef, sheep and pigmeat markets suffered badly from low prices over recent months. The international markets for pigmeat also suffered badly, not just from the Russian crisis, but also from the effects of the weakness in the Asian markets and a serious general oversupply in EU pigmeat markets. The cattle and beef markets, the sheep markets and pigmeat markets all suffered badly from low prices over the past few months.

As each new development unfolded I responded effectively in a swift and comprehensive manner to counter the negative effects. I will briefly recount the wide range of actions I have taken to date. For example, total direct income payments this year will amount to £1,023 million. This has set a new landmark in that they, for the first time, represent over half of aggregate, that is 55 per cent, of farm income. This record figure reflects the speeding up of payments by the Department of Agriculture and Food; an increased advance in suckler cow and special beef premium payments from 60 per cent to 80 per cent; and a special package of almost £20 million, including £10 million in fodder payments, £6 million for a mountain ewe destocking scheme and almost £3 million in sheep headage top-up.

Other key actions I have undertaken during the past few months include: winning substantial increases in export refunds for beef and pigmeat, export refunds for beef were increased by 9p from 43p to 52p, there was a 33 per cent general increase for export refunds for pigmeat and a 75 per cent increase in export refunds for pigmeat destined for the Russian market; getting private storage schemes for sheepmeat and pigmeat — 70,000 tonnes of private storage for pigmeat; and obtaining increased access to intervention for heavier cattle. I call on the industry to use those achievements and facilities, particularly increased access to intervention and the aid to private storage scheme for pigmeat. As I said publicly on several occasions, I am disappointed the meat processors have not used the improved intervention arrangements or the improved APS scheme more extensively. However, the reality is that without the availability of intervention support it is doubtful if the fall in cattle prices would have been arrested.

The figures for farm income released by the CSO on Monday this week show that aggregate income fell by 4 per cent for the year as a whole. While average farm income would have fallen by less than this, as farm numbers are declining, the result is very disappointing, coming after last year's decline and in view of the very good income performance in the previous five years during which average farm incomes improved by some 50 per cent. The 1998 figures mask different performances in different sectors. For example, dairy farmers had a good year while cattle sheep and pig farmers were hit by substantial price losses. Nevertheless, the CSO figures show that overall agricultural output value for the year fell by less than 1 per cent. There was an increase in the cost of production, the input side of the equation, which was more problematical. Input costs are estimated to have risen significantly and depreciation also increased. The latter is good news in the sense that it reflects the very high levels of investment in recent years which will stand to the agricultural industry for years to come.

We estimate that direct agricultural payments to farmers will reach the record level of in excess of £1 million in 1998. That is an extraordinary figure and a 9 per cent increase on last year's figure, which was an all-time record. This level of direct subsidy payments to farmers shows how strong my commitment is to supporting the sector. While others made a good deal of noise and issued wild and exaggerated statements, I worked hard to ensure that farmers would have the support they needed and this is why the income figures are better than many people had anticipated. Farmers are entitled to compensatory payments. I was Minister in the early 1990s when these direct payments were negotiated and they are an important buffer in these difficult times. I ensured that extra resources and staff were provided in the Department and compliment the staff who worked overtime and unsocial hours over weekends to ensure the extra payments were issued to farmers.

With this budget the Government has shown its continuing recognition of the difficulties faced by farmers and its continuing support for the sector. This budget has delivered in two key areas, in providing further support for our most severely disadvantaged and marginalised farmers; and in providing a number of measures which will strengthen the competitiveness of the industry for the future. For example, the 1999 Estimates provide £814 million gross for agriculture and food, a record figure. That is a net increase of 19 per cent, which will underpin the sector during this difficult period and build for its future development.

The measures in the budget are well balanced. They will provide assistance to low income farmers and our rural communities, while also strengthening the competitiveness of the sector for the future. Low income farmers will benefit from the introduction of the new smallholders assistance scheme. They will benefit from headage support payments of £111 million for next year and other general social welfare measures including the new pro rata old age contributory pension. Rural communities will benefit from Leader and INTERREG payments of £40 million and from the £50 million special allocation for rural water and sewerage schemes.

Other measures include the extension of the 25 per cent general rate of stock relief and the 100 per cent special rate for young trained farmers to 5 April 2001; and an increase in the flat rate VAT refund from 3.6 per cent to 4 per cent. The value of that flat rate VAT refund will be approximately an additional £11 million for the coming year, making its total value in excess of £100 million. Farmers in isolated rural areas, particularly in the west, will benefit from funding for REPS, which was increased by 21 per cent for the coming year. The take up in that scheme has been fabulously successful. The total allocation for next year will amount to £176 million, which is in the order of £3 million per week for that scheme alone.

I was particularly pleased to be able to help secure an allocation of an extra £25 million to allow for the reopening of the farm investment schemes, including the control of farm pollution scheme, the dairy hygiene scheme and the scheme of installation aid for young farmers. A total of £10 million over three years has been allocated to the scheme of installation aid. An increase of up to £73 million has been provided for the farmers early retirement scheme, £42 million has been provided for disease eradication and controls and £6.5 million has been provided for the national beef assurance scheme. That is an important scheme to ensure we continue to trade and maintain our presence in the valuable beef market worldwide.

I am particularly pleased with the budgetary provision for low income farmers. It allowed for the introduction of a smallholders assistance scheme. The new scheme has several significant advantages over the previous scheme. Under the new scheme, the means test applied to farming families to assess eligibility for the scheme will be changed. The new system provides a £100 disregard of annual income for each of the first two children, and a £200 disregard each for the third and subsequent children. Additionally only 80 per cent of remaining income will be counted for the purpose of the means test. As a result, many farm families who do not currently qualify for assistance will now qualify, and many families who already qualify will be eligible for higher rates of payment. For example, a farmer with a spouse and two children, earning £100 per week, would have qualified under the old scheme and received a weekly payment of £38 per week. Under the new means assessment system that same farmer will receive almost double that amount, £66 per week. A farmer with an income of £150 per week, who has a spouse and two children, would not have qualified for the old scheme, but under the new scheme will qualify for a substantial weekly payment.

The number of participants in the scheme is expected to almost double from 6,800 under the old scheme to almost 14,000 under the new scheme. The scheme will cost in the order of £45 million next year, but as it is demand-led it may be more or less than that depending on the number of farmers who apply to participate in it. The essential matter is that the Government has always recognised the important role the farming community plays in maintaining the fabric of rural society and this new scheme reinforces our commitment to them.

The Government's decision in that regard is in addition to the recent decision by the Minister for Social, Community and Family Affairs to introduce a pro rata contributory pension which will benefit all self-employed people, about 8,000 in all, who were aged 56 or over in April 1998 and who have at least five years paid contributions since then. This scheme will cost an additional £18 million.

A provision of £111 million is being made for headage support payments in 1999. This includes a further substantial allocation from the Exchequer. Over the six years of the Structural Funds programme a total of £718 million in cofinanced and non-co-financed funds would have been paid out under the headage schemes. These payments benefited 100,000 farmers in disadvantaged areas. These are the most deserving farmers. The payment of £718 million over the past six years is substantial and because of front loading in these schemes, almost half of that money has come from the taxpayer or the Exchequer.

An allocation of £40 million has been made for the Leader and INTERREG schemes. These programmes encourage and support development initiatives by local groups and rural communities.

Earlier I mentioned the allocation over three years of £50 million for rural water and sewerage schemes. This allocation involves two programmes, one relating to facilities in small rural towns and villages, and one directed towards improving water quality in private group schemes. With the concentration of industry around urban centres, and the consequent migration, people often forget that nearly 40 per cent of our population still resides in rural areas. This £50 million was badly needed in those areas and once more shows our commitment to maintaining rural society.

The provisions made for improving the competitiveness of the agri-food sector for the future include measures to improve the age structure, protect the environment and strengthen further action on food safety and quality.

With regard to the age structure, this budget sees the introduction of a new, targeted national scheme of installation aid for young farmers. The scheme will be funded by the Exchequer at a cost of £10 million over three years.

The allocation for the farmers' early retirement scheme has been increased to £73 million for this year. The early retirement scheme, which applies to farmers over 55 years of age, has assisted the hand over of land to younger farmers. To date more than 250,000 hectares have been released to young farmers to improve the viability of their holdings, thereby improving the structure of the industry overall. To date over 8,000 eligible farmers have joined the scheme and are receiving pensions of up to £10,000 per annum.

Some specific agricultural tax measures were introduced in this budget. The general 25 per cent rate of stock relief and the 100 per cent rate for young trained farmers have been extended by two years, from 5 April 1999 to 5 April 2001. This measure has a dual purpose — to encourage further investment in stock and to encourage the participation of young trained farmers. Both of these measures will be worth a total of £1.5 million in a full year.

The flat rate VAT refund will be increased from 3.6 per cent to 4 per cent. The rate change will ensure that farmers continue to be compensated in full for the VAT they bear on their business inputs. The change will cost £10.76 million in a full year, while the total benefit accruing to farmers is in excess of £106 million per annum.

There have been many measures introduced in this budget for the purpose of maintaining and improving the environment. The rural environmental protection scheme has been very successful in the past. A measure of this success is the high level of participation in the scheme — 38,500 to date. The 1999 allocation shows an increase of 21 per cent to £176 million. This will allow more farmers to participate in the scheme and to avail of attractive supports for farming in an environmentally friendly way.

I have worked hard to secure the reintroduction of the farm investment schemes. Application forms for the scheme will soon be available. An additional £25 million has been allocated in this budget, bringing the total allocation to £36.5 million. This allows for the reopening of the control of farm pollution and dairy hygiene schemes. This funding is in addition to the £45 million which I have already secured for on farm investment since taking office and meets the commitment in An Action Programme for the Millennium. The newly introduced schemes will be more focused in their approach than in the past, with the emphasis on assisting the smaller, more marginalised farms.

In strengthening the development of our food industry, food safety and quality must be given the absolute importance they deserve. The market demands a strong focus on disease eradication and control. In response to these demands, we have increased the budget allocation by 18 per cent to £42 million. This will ensure that the systematic and comprehensive disease control measures which are already in place can be further strengthened.

Still on the theme of food safety, we have maintained our allocation of £6.5 million to the national beef assurance scheme. Provision in this area is to ensure that the national infrastructure for cattle traceability and the associated quality control checks are implemented.

The marketing of beef in the future will depend more and more on the guarantees we can offer our customers on the safety and the quality of the product, as well as its traceability to the farm of origin.

The agri-food industry will also benefit from the changes introduced in corporation tax. The 4 per cent reduction in the top rate of corporation tax is significant and is the first of many reductions intended to reduce the rate to 12.5 per cent by 2003. This step should attract further investment and aid competitiveness and job creation. Equally important for small business is the increase in the threshold for the low rate of corporation tax, from £50,000 to £100,000.

The farming sector will also benefit from some of the more general taxation and social inclusion measures introduced in the budget. Income tax has been changed dramatically in preparation for a move towards a tax credit system. The basic personal allowances have been standard-rated and substantially increased. These changes will remove from the tax net 80,000 taxpayers, who would otherwise be liable for tax and I am confident this measure will include many farmers. These changes are worth £581 million in a full year.

Budget improvements in social welfare will cost £288 million in a full year. Its focus on the elderly will be especially welcome in rural areas. In addition to increased old age pensions, the budget provides for improved eligibility conditions for the medical card for people over 70.

The tax and expenditure items I have outlined are a well balanced package of measures to support the agri-food sector. They will contribute both to assisting the sector in its short-term difficulties and to supporting its long-term development. Our objective is to ensure that farm families get a decent income and that they have a realistic future in the sector.

Farm families and rural communities generally will benefit substantially from the broader tax reform measures in the budget and the improvements in social welfare rates. Most importantly, this budget will contribute significantly to the continuation and reinforcement of our current economic success. This is vital to us all.

Mr. P. Carey

I am concerned about Deputy Broughan. He seems to be suffering from political amnesia. He excoriated the Government on a number of issues, particularly education and social welfare. It was the Government of which he was a member which froze teacher recruitment. The present Minister has reversed that decision and 450 new teachers have been recruited. The adult education budget has been doubled twice by the present Government.

The funding for social welfare when the rainbow Government left office was £215 million. In 1999 that figure will have increased to £305 million. Child benefit was inexplicably reduced from £26 million in 1996 to £25 million in 1997. Thankfully it will increase to £41 million in the next year.

It makes me wonder if political amnesia is spreading through the Labour Party and Democratic Left in advance of their new incarnation on Sunday. After that they will be able to claim in a Kafkaesque manner that they have never been in Government.

The budget announced by the Minister for Finance on Wednesday will be seen in the future as one of the best budgets, if not the best, introduced since the foundation of the State. I am delighted that much of its content will improve the living standards of all those in the constituency I serve, Dublin North-West. The majority of the population in my constituency is in the lower to middle income group. The taxation measures in the budget will ensure that many of them will no longer be eligible for income tax. Those who are liable will find the burden greatly reduced.

The reductions in income tax announced by the Minister constitute the greatest single improvement to the financial benefit of the taxpayers of this State. In saying this, I am conscious that this is only the second of the Minister's five budgets and by the time he has delivered his fifth, all of the citizens of this State will have achieved a level of affluence which would have been inconceivable 20 years ago, when unemployment was rife, inflation was rampant, the standard rate of income tax was 35 per cent and the higher rate was 65 per cent. This is a tribute to the prudent economic policies of Fianna Fáil in Government. It would not be indulging in hyperbole to recall the words of the late Seán Lemass that the rising tide has raised all the boats. We still have not reached full tide.

While the taxation aspect of the budget is by far its greatest achievement, there are many other aspects which commend themselves to the House. Not only have the commitments given in Partnership 2000 been fulfilled, in many cases they have been greatly exceeded. On income tax alone, the commitments have been exceeded by 60 per cent.

All social welfare payments will be at or above the levels recommended by the Commission on Social Welfare, again fulfilling the commitment in Partnership 2000. The rate of these increases when compared to the rate of inflation is also a matter for satisfaction. For instance, the rate of increase in the retirement or invalidity pension for those over the age of 65 is over twice the rate of inflation. I am delighted to note that the increase in pensions is being brought forward to the beginning of June.

I spoke recently on a Private Members' motion concerning pensions. I noted then the manner in which the self-employed were restricted in making pension provision for themselves when compared to others who were eligible for membership of occupational pension schemes. I am pleased, therefore, that the budget allows for a substantial improvement in the position of the self employed in this regard. Not only have the levels of contribution allowable for income tax been greatly increased — up to 30 per cent of net relevant earnings for all those over the age of 50 — but the rates allowable for all those over the age of 30 have been improved considerably.

With regard to that same motion, I am also pleased to note that the Minister has made provision for the self employed who were excluded on grounds of age from qualifying from the contributory old age pension. This provision also extends to access to the free schemes. The 8,000 pensioners and 2,000 qualified adults who will benefit from this will be greatly pleased.

I was interested to note the Minister's statement on the requirement under self-employed pension policies to purchase an annuity on the date of retirement. There is no doubt that the lowering of interest rates has had a significant adverse impact on the value of the pension which may be bought from the pension fund on retirement under the law at present. Any method which can be adopted which will assist will be appreciated. Consideration should be given to extending the same treatment to members of occupational pension schemes, who are equally affected. Provided the safeguards that apply to existing arrangements can be maintained, I see no reason a change in the need to purchase annuities may not be considered.

I am confronted on a daily basis in my advice centres with problems of social welfare, health and unemployment. The ability of all to conduct our lives with dignity and confidence is crucial to the well being of society in general. The extent to which we in Government can contribute to that well being will help in no small way to overcome the problems I encounter. The social welfare measures introduced in the budget will go a long way towards improving the status of those who, through age or infirmity, are no longer in a position to influence their own lives in this respect.

One measure of our success in solving the problem of unemployment is that the Minister has been able to abolish the employment and training levy. One sure way of reducing my workload is the Government's continued commitment to reduce the unemployment rate to 7 per cent by the end of next year. Especially noteworthy is the announcement of the pilot project of 1,000 places, confined to those who have been unemployed for five years or more. I find it very heartening, in one sense, to see the number of signs in shop windows announcing staff vacancies. I recently heard reference for the first time in a long time to Fianna Fáil's policy of full employment and I hope we will continue to press with all the means at our disposal to achieving that aim in the early years of the new millennium.

The Minister stated in his address to the House that there was no reason we cannot achieve further substantial employment growth. He quite correctly focused attention on the need to ensure the unemployed acquire the skills which will enable them to gain employment. These skills are important if Forbairt and Enterprise Ireland are to be able to continue their success in attracting overseas investment.

The Taoiseach referred last week to the necessity to focus attention on areas of significant urban unemployment. The Minister has allocated £15 million for the purpose of upgrading FÁS training and community enterprise facilities. I look forward to being able to say we do not have an unemployment problem in my constituency. The measures announced will contribute to helping this come about.

Ballymun is part of my constituency. The development of Ballymun took place in the 1960s to overcome the chronic housing shortage in the inner city at that time, which arose partly as a result of the success of the first programme for economic expansion introduced by Fianna Fáil. During the 1970s, however, Ballymun became synonymous with social exclusion.

The Fianna Fáil constituency organisation in Dublin North West lobbied successive Ministers to refurbish the area during the 1980s. We were delighted when the initial refurbishment programme was announced. The beneficial results of that programme were immediately obvious and the decision of the Government to support a complete rejuvenation programme was a source of great satisfaction to us. I was further delighted by the Minister's specific reference to Ballymun in his budget speech and the allocation of £28 million to include this programme in the coming financial year. This is a clear indication of the Government's commitment to replace social exclusion with social inclusion.

The state of a nation's health is surely as good an indicator of its well being as the state of its wealth. It is even more important if one believes the old Irish proverb — is fearr an tsláinte ná an táinte. Being able to afford to maintain one's health is a contributory factor in itself.

The medical card is possibly the single most important item in the lives of many people. Improvements in medicine generally mean that people are now living longer but the cost of medicine can place a considerable strain on people, especially as they grow older. Therefore, the Minister's announcement of an increase of onethird in the income guidelines for eligibility for the medical card for those over 70 years of age in the coming year will be very welcome to those who will now qualify. The Minister's promise to double the income guidelines over the next three years will be a source of great comfort to those who will qualify for a medical card as a result of this change.

Just as important as the medical card for the elderly is the medical care of the young. I am particularly pleased, therefore, by the recent announcements regarding the children's hospital in Temple Street. This hospital is in the constituency adjacent to mine and numerous generations of children from my constituency have benefited from the care they received there. Temple Street Children's Hospital is an essential feature of medical care in the north city of Dublin. It is a considerable advantage and comfort to the people of the north city area to know the services which this hospital provides will continue to be provided in the same area in the future.

The medical services, generally, have been under a great deal of pressure recently. The Minister is to be commended for the additional £8 million he has allocated to reduce waiting lists. Almost half of all State expenditure over the coming year is allocated to the Departments of Health and Children and Social, Community and Family Affairs, a total of £8.4 billion. I hope these allocations will lead to a reduction in future allocations for those Departments, and that the improvements in people's well being generally and the abolition of hospital waiting lists will help bring this about.

I have commended many aspects of this budget. In so doing, I have referred to the commitments made in Partnership 2000. This agreement shows how the social partners, working in co-operation with the Government, can play a part in improving the economy. Fianna Fáil was the first party to sit down with the social partners and plan a process which, in turn, has led to the present economic wealth of the country. The continuation of that process will ensure that our current economic status can be maintained into the new millennium. People speak about the feel good factor which is undoubtedly evident around the country, notwithstanding the difficulties in some areas. I commend the budget to the House.

Mr. J. O'Keeffe

I wish to share my time with Deputy Perry.

Acting Chairman (Ms McManus)

Is that agreed? Agreed.

Mr. J. O'Keeffe

There was a popular song some years ago, which struck a chord with many people in Ireland, called "Do they know it's Christmas".

Mr. Treacy

Who was the author?

Mr. J. O'Keeffe

The reason it struck a chord was because it referred to the poor of the Third World and that they would have no joy at Christmas. There are many people in this country who will not know it is Christmas as a consequence of this budget and there will be no joy for them in the months leading up to next Christmas either.

There was an attempt to withdraw the Christmas bonus from the 10,000 people on supplementary welfare. Thankfully, public spirited officials drew the matter to my attention and sent me copies of the documentation, as a result of which I was able to shame the Minister — who first tried to justify the withdrawal of the Christmas bonus — into restoring it. However, he only restored it to the level at which it was paid last year.

I wonder if there is any Christmas joy in this budget for the 35,000 people on hospital waiting lists, who cannot understand why, in a country of full and plenty, they must wait for up to a year for a much needed operation. Is there any joy in the budget for the 45,000 people on housing lists — an increase of 40 per cent since the Government came into power — who have been told there will be 600 extra housing starts next year? What impact will that have on the 45,000 people on the waiting list, which is estimated to increase to more than 50,000 next year?

Is there any joy in this budget for the 6,000 people who are homeless on either the streets or in emergency accommodation? Is there any joy for the one million children who will receive the magnificent increase of £1 per month? Only 25p per week can be afforded for them in this budget. Is there any joy for the 27,000 farmers who are below the poverty line? If one divides up the £5 million allocated in the budget to deal with their situation, one will find that about £170 a year will be available to relieve the poverty of each farm family. Is there any joy in the budget for those who rely on social welfare? A disabled man who is married with four children will get nothing until next June; he will then get £3, his wife will get £2 and his children will get nothing.

The song I spoke about at the beginning, "Do they know it's Christmas", referred to the Third World, an area in which I had huge interest when I was a Minister of State in the Department of Foreign Affairs. Can the Government justify the fact that for the first time in eight years, at a time when the country's coffers are overflowing, we are cutting the percentage of GNP going to the Third World? This is happening despite the silly protestations of the Minister of State who did not carry out her threat to resign when there was no further increase in Third World aid. I will come back to those issues in a moment because there are some broader considerations that we have to debate.

What kind of society do we want? We have great wealth now and I am delighted about it, but in relation to the distribution of that wealth there are decisions to be made. Do we want a budget that contributes to the creation of an underclass? The Minister for Finance had unprecedented and virtually unlimited resources at his disposal. He had a choice to make in relation to the poor. He also had a choice to make in relation to tax, and thankfully his decision there reversed the original approach adopted by this Government in totally favouring the rich. I approve of those choices. I approve of the fact that the Government has changed course from what I referred to last year as the "fat cat" approach.

However, in relation to the have-nots in our society, he could have made some impact on the problems of the poor, he could have prevented the poverty gap from widening further, or he could ignore the claims of the poor. As the Minister for Finance said, he chose to maintain the present situation. That will contribute to the creation of an underclass in our society. It would be an overstatement to say that it is Government policy to starve the unemployed into low-paid jobs, but there is some merit in that claim. At a minimum, the approach of this Government is that the poor and the unemployed will be maintained in frugal existence without a decent quality of life.

There should be encouragement to move from welfare to work. However, we have to accept that of the welfare budget less than a quarter relates to the unemployed. We also have to accept that there are many who, because of functional illiteracy or lack of skills, will never work. There is a choice to be made. Do we condemn them and their children to be maintained just above subsistence level? That is the choice this Government has made, and it is the wrong choice. When there is wealth to be distributed, the very poor in our society, and the poor in the Third World for whom I have always pleaded in the past, have to be given some priority. That did not happen in this budget and that is its greatest defect. Last year the budget concentrated on the rich and ignored the low-paid and the unemployed. I accept that there was a switch in relation to tax in favour of the low-paid this year, a switch of which I approve, but there is virtually nothing apart from inflation for the unemployed.

In regard to the Christmas bonus for those on supplementary welfare, I accept the Minister's belated explanation that he did not know what was happening. However, I cannot accept the approach he adopted once I drew it to his attention. His initial reaction once I drew to his attention that 10,000 people, the poorest of the poor, were going to be deprived of their Christmas bonus because of a stupid, infamous circular that emanated from his Department on 27 November, was to try to justify it. His initial reaction was to blame the official who sent out the circular and who claimed that this was the right thing to do, and the Minister is responsible for that. In relation to the issue of who is running the Department and whether the official did this on his own without reference to the Minister, how could that have happened? Given that it did happen, has the Minister assessed the situation and put measures in place to ensure that it will not happen again? I raised the issue with him last night and he gave no answer. I challenged him on the issue and he ignored the point. I raised the issue that good management involves good communication.

There was, under previous Ministers, an SWA advisory group consisting of officials of the Department and officials of the health boards which met once a month. I have discovered that that group has not met since November of 1997 under this Minister. That was the cause of the problem and that is where the greatest negligence on the part of the Minister lies. He ignored that point in his reply to the debate on this issue last night. I want to ensure that that will not happen again. I particularly want to ensure that this Minister does not continue to attempt to justify a measure he took which would have resulted in cutting off the Christmas bonus from the poorest of the poor in our society.

Regarding hospital waiting lists, I cannot understand why people have to wait in pain for operations. No explanation has been given as to why that should happen. The waiting list is 35,000 — it is like a telephone number — and is rising. The situation is brought home when one sees somebody in one's clinic whose mother of 70 years of age is waiting for a hip operation and has been told that she has to wait another year, and wait in pain. Why does that happen in this country of full and plenty? Why are we closing hospital wards? Why were 100,000 bed nights taken out of the hospital system this year when there is such demand? I cannot understand it. The Government has not given an explanation. The miserable couple of million pounds that was allocated in this budget to alleviate hospital waiting lists will do nothing to stem the tide. The numbers on the waiting lists will go up. There is a crisis in health care and the one person who does not seem to know is the Minister for Health and Children, Deputy Cowen. He has to be told, and this Government has to take responsibility if he is not doing his job, as I believe he is not.

Regarding the housing lists, the cause of the 40 per cent increase is that many people who would normally be able to provide their own housing are now piling onto the housing lists because of asset inflation, which is increasing and will continue to increase. The measures taken by this Government were too little too late and they will not work. The numbers on the housing lists are going up and up. What is even worse is that rented accommodation, in so far as it is available, has gone up by 30 per cent in cost in this year alone. Anybody who has children attending third level education, as I have, will be aware personally of that. If there are people who cannot afford it, all they can do is to pile onto the local authority housing list, yet, with a 40 per cent increase in the list, this Government has provided for 600 extra house starts next year and trumpets it as a huge benefit in this budget.

I talked about the homeless and about the one million children getting 25p extra a week next year. Let me make one reference to the farmers. I could not understand the reaction of the farm organisations to this budget. I claimed that farmers, and all self-employed people, should be entitled to family income supplement. It can be done. It is done in Northern Ireland and in the UK. There is no problem, provided the political will is there. This Government decided not to do it and instead trumpeted an increase——

Mr. Dempsey

As did the previous Government.

Mr. J. O'Keeffe

The money available now was not available to previous Governments. We now have the money, but the wrong decisions have been taken. The political will does not exist. I have investigated the situation in Northern Ireland. It can be done properly, correctly and fairly. According to independent analysts there are 27,000 farm families living below the poverty line. There are many others self-employed in the non-farm sector in urban and rural areas who are also living below the poverty line. The FIS should be made available to them. However, the Government has said farmers' dole will be extended and it talks of £15 million. The farm organisations were totally gullible in their response on budget day as £15 million is a phoney figure. If one examines the small print in the budget and its principal features one will find a figure of £5 million for 1999. Five million pounds is being provided for 27,000 farm families — husbands, wives and children who live in the country — leaving each family with less than a couple of hundred pounds for the entire year. This is the extent of the munificence of the Government in dealing with the problem.

As far as the poor are concerned this budget is pathetic. The have-nots have not been looked after at a time when there is full and plenty in Government coffers. There is provision for a £1 billion surplus in the budget. I believe this amount is understated and that the surplus will be £1,500 million by the end of 1999. One tenth of this figure is being granted in total social welfare increases. This is the extent to which the poor of the country have been looked after, in stark contrast to the bookies and gamblers who will benefit to the tune of £24 million per year as a result of the budget.

We have a choice as to whether we want to continue to be the country in Europe, apart from Portugal, which pays the lowest amount of money in social welfare. Do we want to be highlighted in the UN human development report as having the highest proportion of people living in poverty in the industrialised world, apart from the US? Do we want to continue with glaring inequalities in society? There was a time when we did not have money to deal with these problems. My contention is that we had to encourage enterprise to create a wealthy country. We now have a wealthy country and the question arises as to what to do with our wealth. Do we encourage those who are rich to become richer by halving the capital gains tax as was done last year? Do we encourage people with stocks and shares? Today Goodbody Stockbrokers, a very good firm on whose advice I rely, issued its report. There is a 20 per cent increase expected on the Stock Exchange next year. Whom will this benefit? I am not saying this should not happen, but at the same time we should be cognisant of the demands and needs of the poor in society and make a conscious decision to direct a reasonable proportion of the wealth of the country to deal with those needs. The budget clearly has not done this and its failure in this regard is its most glaring defect. It has contributed to a widening of the poverty gap. If Ireland is to care about its poor it does not need this Government which does not care at all about their needs. For this reason the budget must be rejected.

Mr. Perry

I thank Deputy O'Keeffe for sharing his time. I wish to focus on the budget in the context of business. The key areas for most businesses are corporation tax, employment and income tax, work incentives, labour market flexibility, PAYE allowance, business regulation, housing policy, child care, training and education. These are all very important in the context of the huge role played by small business. A vibrant business sector is crucial to the economy in generating employment and income. The small business sector, for which I have responsibility, makes a significant contribution to the ability of the Government to provide the essential services of health, social welfare and education. The sector has played a fundamental role in creating current economic growth and continues to be the central source of sustainable, long-term jobs. In 1998 alone the small business sector will create over 53,000 jobs, bringing the aggregate employment growth beyond 100,000 in the past three years. This figure speaks volumes and clearly shows that with the right environment, small business will translate economic growth into jobs.

The employment gains of recent years, particularly those in 1998, must be built upon in the coming year. What must be tackled very aggressively, and this is where the budget failed in many ways, is a reduction in the burden of taxation on business and the regulation and simplification of form filling. Action must be taken on the Government's commitment to the reduction of corporation tax, something it has moved on. It is also necessary to maintain a low inflation environment, address specific labour market issues and concerns regarding child care provision and education, refocus expenditure from direct employment schemes to market led training for the unemployed and further training for those in employment. We should examine FÁS training schemes, especially in the context of people not being able to take time out to take up direct training schemes. Incentives given to employers to provide in-house training would prove very productive.

Not all elements of the so-called give-away budget have been given the thumbs up in business circles. Many firms say they will receive no benefit from it. IBEC has stated that larger manufacturing firms will be significantly disadvantaged by the hike in the employer's PRSI ceiling as they face rising corporate tax. For owner-managed companies with a skilled staff base the additional PRSI charge is seen as an unwarranted extra cost burden at a time when payrolls are being squeezed by nationwide skills shortages. This discriminates against the manufacturing sector which does not stand to benefit from the reductions in corporation tax. The PRSI adjustment was clearly aimed at securing more tax contributions from companies now that corporation tax is being reduced. Last week's budget slashed corporation tax by 4 per cent to 28 per cent, and a schedule was announced which will result in corporation tax of 12.5 per cent for all firms by 2003 in partial recompense. The ceiling applies to 12 per cent of employer's PRSI rate, but was increased from £29,000 to £35,000, resulting in an estimated additional charge of £720 per employee. No firm will argue against lower corporation taxes, but while PRSI charges will mean additional costs for all, the change in corporation tax will not benefit the manufacturing sector. The reduction in corporation tax has certainly assisted the maintenance of employees by companies.

Reliable estimates for the cost of the PRSI measures are not available as yet. However, a company in Dublin with 300 employees has estimated an additional annual cost of £100,000. Every company with more than ten or 12 employees will suffer to some degree.

The treatment of child care in the tax and social welfare systems is a key factor in determining work incentives for spouses and female labour force participation. An increase in the supply of quality child care facilities has the potential to increase the supply of labour and thereby ease the pressure on many sectors experiencing labour shortages. There is evidence suggesting that recent increases in the cost of child care have driven labour force participants out of the labour market. A working group established under Partnership 2000 has not furnished its report. The budget provided a very insignificant amount in the context of the report. It is critically important that the report is brought before the House and that action is taken on it. There are many employers who cannot get staff because of the child care situation.

Improved levels of investment in training for people in employment is crucial. There should be prioritisation of expenditure for those in employment and labour market training for the unemployed should be made more relevant to the current labour market rather than being programme driven. Employers have the main responsibility for investing in ongoing training and development of their employees. By international standards investment levels in this area are well below the average. Action is required to redress the situation.

Educational policy is a critical factor in determining business success. Information technology developments and the change to the euro mean that employers should be given tax breaks to invest in their staff. I hope the Government pushes for a minimum wage, as that would make even retailing a challenging career. A minimum wage would give people purpose.

The budget's car taxation proposals have a green focus. Car dealers suggest a drop in sales of 30,000 cars next year as a result of the increases, though I do not agree with that figure. The marketing director of Saab Ireland stated that the budget's measures were supposed to be environmentally friendly, but diesel cars, which are environmental sound, would be put off the road. People will shift to two litre petrol cars instead. Those with £30,000 for high powered cars will be able to pay the extra £700 or £800, but our rate of VRT is considerably higher than the European standard.

The regulatory environment in which small business operates is a crucial component of competitiveness. Over regulation restricts the ability of business to respond to change at a time when the global business environment requires even more flexibility and innovation. At an EU Council meeting in Amsterdam in June a strong commitment was given to the simplification of the existing situation and the introduction a new legal and administrative regime to improve the quality of community legislation and to reduce the administrative burden on business. An Irish company with eight employees must spend 1,000 hours per year on the regulatory paperwork, such as VAT, company inspections, PRSI, etc. Every company must employ a full time secretary to comply with all regulations. The Government should consider making it simpler for businesses to employ people and to reduce the administrative burden.

I welcome the increase in tax free allowances from £79 to £100. However, employers must be given an incentive to expand their businesses and take on staff. There is a huge labour market shortage in hotels, restaurants and supermarkets due to the high costs of child care. The Government is trying to reduce the high unemployment figures, and FÁS schemes should be dramatically changed to help that initiative. I am disappointed that CE schemes have been capped and reduced. That is disappointing for those who wish to train people.

The strategic management initiative report is long overdue. A central regulatory unit should be set up to ensure that future legislation will make life easier for businesspeople. A business test panel should be set up to assess the administrative consequences for business of any new legislation. We must look at Fruit of the Loom where 2,400 people are affected. The service sector, in which I work, employs many people, but very little support has been given to it. This budget failed that sector dismally, apart from the tax free allowance.

The £3 for social welfare recipients was insignificant, while the £6 for old age pensioners would just buy a bag of coal. The economy is booming and we have the biggest surplus ever. Much more could have been done for people in need. Social housing is a major problem — 2,000 people are waiting for houses in Sligo.

Minister for the Environment and Local Government (Mr. Dempsey)

I wish to share my time with Deputy Dennehy.

Acting Chairman

Is that agreed? Agreed.

Mr. Dempsey

Any Member referring to unlimited resources being available to the Government is not living in the real world. The country's finances are healthy; there is no question about that. However, our national debt is in the region of £30 billion and we pay £2 billion per annum in interest. That cannot be ignored. The message that the Minister for Finance gave during the budget must be borne in mind. If Opposition Deputies were in Government they would say the same if they were true to their ideas of fiscal rectitude. We have prosperity but we cannot blow everything. We all know that there will be future periods which are not as good as the present, and it is wise and prudent to try to ensure that we have something in store for those periods. We must reduce debt as far as we can. We do not need to eliminate it, but we need to reduce it. For every £1 billion we lower the national debt by, we will have significantly lower future payments to make from current finances. We should be honest about our need to reduce that debt significantly to save ourselves pain when the inevitable downturn comes. That may not come in the short to medium term, but we have all seen economic cycles and we cannot pretend that the good times will last forever.

Choices were made for the poor in this budget, and the package of tax reforms aimed at the less well off, the lower paid and those on social welfare was very generous. It compares more than favourably with any previous Government's package. That needs to be restated.

Deputy Perry made a constructive contribution on the business sector. Deputy O'Keeffe criticised us for some of the changes we made to corporation and capital gains tax. However, if we are to meet the targets which have been set — nobody in this House has said that we should not reduce corporation tax to the levels to which we are committed — a corollary is that because business is getting this advantage, it must not be as quick to come with its hand out looking for grants, subsidies and supports for its activities.

I agree with Deputy Perry in terms of the need for investment in training, which is very important to the economy. Business should make such investment with the support provided by the State. It cannot have it both ways. All sides of the House are committed to a low tax economy, whether personal or corporate, but the money that is freed up should be used productively for the benefit of the economy, not just for personal or corporate gain. There needs to be a realisation in business that there are two sides to every story.

I also agree with Deputy Perry's comments regarding small firms and the burden of regulation. Perhaps, now that Ireland has emerged from an era where every right and protection had to be written into law by regulation to one of partnership, it is possible that the burden of regulation can be reduced, particularly for smaller firms, and this should be considered.

The Government is not in the business of reflected glory, although it could be at a time when the economy is booming as a result of the rigorous restraint practised by previous Fianna Fáil Governments. It would be very easy for the Government to bask in such glory but it has stated clearly that it has chosen to be judged by what is achieved as a result of these economic good times, not just by the fact that it is in office when times are good.

Ireland is much more than an economy. It is a nation whose values and priorities, hopes and dreams must be served and supported by the economy, and that must be our philosophy. It is important to stress that approach of the Government. We must set out our stall against the development of the pockets of prosperity around the country. The prosperity we are generating and hope to maintain must be shared across the community, not just geographically. It must be shared with people on the edge of hopelessness, those we have tended to leave out generally and whose hopes we tend to postpone. Prosperity, above all, must be shared in a way that allows for continuity because there is nothing more painful for anybody than to raise hopes and expectation and then dash them a year to two later. We must be prudent about how we maintain the current boom.

Continuity and inclusion are key concepts which underpin the budget. I wish to address aspects of it which affect my Department. Increased investment in roads and water services, which I have secured for next year, is an object lesson in continuity. That investment will promote continued economic growth and ensure that it is environmentally sound and sustainable. Similarly, funds are being pumped into social housing as part of our drive towards inclusion to share the benefits of the boom with those who currently cannot afford to buy their own homes.

The infrastructural developments which will result from the budget are aimed at widening the possibilities for town and country alike. For example, overall State investment in improvement and maintenance of national roads amounts to in excess of £336 million. That is an important step towards continuity. If there is to be sustained growth and development then there must be a safe, efficient network of national roads. If industrial development and economic growth are to be shared widely, one must have the same safe, efficient network of national, regional and local roads.

High transport costs work against industry and services and the Government is committed to reducing costs. One of the best of ways to do that is to develop national roads. Even though national roads constitute only 6 per cent of the total road network, they carry approximately 37 per cent of road traffic. The investment in this year's capital programme is a massive 28 per cent increase on that provided by the rainbow coalition before it left office. That record provision will get a number of major projects started. Obviously, the National Roads Authority has responsibility for this but among the major new projects that will start, and are likely to be included next year, are the Limerick-southern ring road, by-passes of Drogheda, Croom and Kilmacthomas and the Newmarket-on-Fergus/Hurler's Cross development. Work is continuing on a number of other projects, such as the by-passes of Arklow, Donegal and Kildare, the Lee tunnel and the Dunleer-Dundalk motorway.

The year 1999 will be another record year for State funding of non-national roads. This is a programme that is crucial to sustain the fabric of rural Ireland. A record £242 million will be available, which is an increase of almost 19 per cent on this year's provision and of more than one third on the 1997 funding provided by the previous Government. Unlike previous years, the bulk of this funding will come from the local government fund, leaving the Exchequer to provide only £7 million. The significant increase in the overall level of funding for these roads next year is evidence of the considerable additional resources generally which will be made available to local authorities next year thanks to the local government fund. The Government is getting there in terms of our roads.

Further substantial progress will be made in the coming year in restoring and maintaining non-national roads. That programme, commenced by the previous Government, is well on the way to reaching the target set for it, which is 2005, and will probably do so before then. Our roads are supposed to get us from A to B. However, anyone who must do so in Dublin city in recent days and months begins to wonder. It is not an exaggeration to say that traffic during peak hours, in particular, is similar to a video in freeze frame. In addition to the frustration that causes on an individual basis there is also an obvious economic loss to the country. However, the possibility that investors might begin to think negatively towards the country or the city because of the clogging of traffic is much more serious. This must be tackled and we are doing so. Prior to the budget, the DTO produced its mid-term strategy and between that and the budget £176 million has been provided. The budget provides £2 million towards the cost of park-and-ride facilities in the Dublin area, one of which has been proposed, by Dublin Corporation, for Finglas. In time I hope it will be possible to extend these facilities on a wider basis throughout Dublin and in other major cities. Cork provided a good example of this last year and repeated the experiment this year.

Traffic management grants will receive a large boost next year with an increase of £15 million, bringing total expenditure on this programme to £24 million. Those grants will allow progress to be made on quality bus corridors, and we have seen positive feedback on the Malahide Road corridor in recent days. I look forward to that additional funding leading to further progress in the coming year.

The images which sum up Ireland relate to the built environment — new office blocks, apartment buildings and developments of all kinds. Huge cranes hover over almost every city and town. The emphasis on the built environment should not make us forget our natural environment. In other countries historic spurts of industrial development have too often been at its expense. We are determined that no such tradeoff will be made in Ireland.

Next year will be important for the development of our water and waste water infrastructure to ensure there is no deterioration in our natural environment. Capital investment will exceed £275 million, which is far greater than expenditure in any previous year — next year's investment in water and sewerage services will be almost double that available in 1997. That major expansion of the investment programme will mean that the largest and most urgently needed water and sewerage projects will get under way more quickly than any of us would have hoped. It will also enable water conservation, serviced land provision for residential development, and other measures to support rural development.

Financing the construction work on a number of largescale projects will form a corner stone of the 1999 water and waste water services investment programme, which I will announce early in the New Year. Construction will begin at Ringsend sewerage treatment works as part of the Dublin Bay project, which will cost about £200 million and is one of the largest infrastructure projects ever undertaken in the State. We will also continue work on the major drainage schemes in Cork, Limerick, Dundalk, Drogheda, Wexford, and Galway, some of which cost in excess of £100 million, others of which cost in excess of £40 million. Those schemes will go a long way towards improving the level of waste water treatment in our major urban centres, will help us comply with the EU directive on waste water treatment, and will facilitate economic development.

Some £39 million in Exchequer funds was allocated in 1998 to projects under the serviced land initiative, which will support overall projects of approximately £100 million in the coming years and will service enough land for 100,000 housing units, the equivalent of two and a half years' supply at current output levels. Progress under this initiative will help tackle the supply side difficulties identified in the Bacon report as a crucial contributory factor to the current problems in the affordability of houses. In the region of £15 million in Exchequer funding will be spent on these schemes in 1999.

Increased funding for the rural water programme facilitates both the improvement of the quality of water delivered from group water supplies and the construction of small water and sewerage schemes. I am delighted to have secured funding from the Minister for Finance for two initiatives in this area. As he announced in the Budget Statement last week, investment of £50 million is to be provided over a three year period, starting in 1999. This will have two key aims. First, funding of £45 million will be provided to water and sewerage schemes serving rural towns and villages. In this way, vital infrastructure will be provided to support economic development in these areas and to counteract rural depopulation. Second, £5 million will be provided to supplement other moneys provided by the Department to local authorities to update group water schemes. This additional money will be directed at upgrading existing private group water schemes which have been identified in successive EPA drinking water quality reports as deficient. Both initiatives seek to redress the imbalance caused by problems in securing EU funding for small and medium sized schemes, and intensify our efforts to tackle poor quality group water supplies. Some £8 million will be provided in 1999 with the balance made available in 2000 and 2001.

There are also financial instruments to promote green and environmental taxation. I am pleased with the measures in this year's budget and more pleased with the Minister for Finance's commitment to seriously examine green taxes and financial instruments in the coming year, in the context of our negotiations on the Kyoto protocol. I look forward to a positive outcome from those examinations, so that we can play our full role in implementing the protocol.

Mr. Dennehy

I compliment the Minister, Deputy Dempsey, not only for the measures he has outlined but for his approach to the development of his Department. Those of us involved in local government are aware he has produced innovative ideas. In my experience this is the first time national Government has provided funding for second class roads in urban areas. The Minister outlined the 28 per cent increase in road funding, which is unprecedented. I am also happy to note his comments on the park and ride projects of Cork Corporation and Cork County Council, which were implemented in the city at the last two Christmases and on the occasion of major events. I am glad he intends to implement it nationally.

I was also pleased to hear of the major projects which we in Cork have awaited for many years, particularly the drainage of the city island. This is a huge undertaking, which could cost up to £40 million initially with greater expense possible afterwards. The Minister is willing to take on these projects and secure funding for them, and I welcome that.

All this is made possible by cohesive management of the economy. In that light I welcome the budget, in common with the vast majority of people in the country. It is the Opposition's unfortunate task to pick holes in the budget, and it has admitted that it is a tough job, but they should be positive in so doing. I will emphasise the good points but will also point out cases where further improvement is required.

Deputy Jim O'Keeffe referred to paltry social welfare increases and delays in paying them, particularly to the elderly. Does he recall that his party held office only two years ago? At that time the Minister for Social Welfare was Deputy De Rossa — Deputy O'Keeffe may not have held office at that time but he was part of the Government. When he was Minister for Social Welfare, Deputy De Rossa gave a 1 per cent increase to the elderly. No attempt was made to shorten the lapse in the time for payment, which should be changed. Increases should come into effect immediately after they are sanctioned. The 1 per cent increase must be compared to the increase this year of 8.3 per cent for the same group. No amount of wishy-washy talk about caring for the elderly will cover up that fact. This is the type of avenue the Government has followed. This is a caring Government and I am happy to be a member of one of the Government parties.

Last week Deputy Rabbitte referred to the Minister for Finance. When he had finished criticising him for his activities seven or eight years ago, Deputy Rabbitte then described him as a lucky Minister for Finance. The Minister may have used that reference to himself at some stage, but it reminded me of the great golfer Arnold Palmer who, when he was so described, said the harder he worked, the luckier he became. This also applies to the Minister for Finance, Deputy McCreevy. He has worked with the Government in taking a completely new approach to the implementation of budgets.

Up to now, budgets were an annual event. Ministers tried to be populist and as responsible as possible. However, this Minister for Finance has taken a completely new approach. There were some giggles last year when he said that budget was the first of a series of five budgets. However, people are beginning to realise that he meant what he said and he could deliver on it. He has brought a new dimension to the job because of his confidence and ability. He has the confidence to take the long-term view and has planned on that basis. All Departments can now plan on a multi-annual basis. It is, therefore, time that budgets were also implemented on that basis. I welcome the Minister's moves in that regard as a change from the one year concept.

The Minister's approach is best viewed in the changes in income tax. Last year he received much criticism for implementing Fianna Fáil Party policy. When I knocked on doors during the 1997 general election campaign, I said that my party's priority was a reduction in tax rates. The Minister implemented that priority last year in the face of much criticism. He pointed out then that he intended to tackle the issue of tax credits and related matters this year. People said he was putting the matter on the long finger, but he delivered on that promise this year.

People have suggested that the source of those decisions is in other parties. However, when the Fianna Fáil Party was in Opposition during the term of the rainbow Government, it established a tax policy group under the chairmanship of Deputy Michael Ahern. Its strong recommendation was a reduction in rates followed by the implementation of a tax credits system. The Government is delivering on both points. In addition, the Minister has ensured that a raft of people will be excluded from the tax net, particularly the elderly who should not pay tax at all. I have sought this move for many years. The cost of collecting tax from the elderly must be the same as the amount collected.

Some Opposition Members have ridiculed the Minister's decision to remove people earning under £100 a week from the tax net. Thousands of people in short-term employment and those on job share pay tax and the Minister has ensured that they will be taken out of the tax net. This type of thinking should be used to help the most deprived sections of society, the elderly and the less well paid.

Last year's budget was described emotively as a budget for the wealthy. However, it took a definite and positive approach which has been continued this year and will continue in the next three budgets. The Minister has outlined programmes which I am confident can be implemented. It is a well planned strategy which should be followed. I am glad the Minister paid off part of the national debt. I am a member of the Joint Committee on Finance and the Public Service and it was told that it cost more this year to service the debt than last year although the debt has reduced.

There has been much lobbying and many glossy productions, but the voice of the elderly is not heard. The number of elderly people will increase by 30 per cent in the next 15 years, but their needs have not been catered for in terms of health care and other areas. We must ensure their voice is heard and the Minister has started moves in that direction by allowing tax facilities for people who provide post-operative care, etc. The Minister will ensure that the voice of the elderly is heard. There is no need to provide medical cards to everybody because the doubling of the allowances will ensure that people who need medical cards will get them. The Minister has taken innovative steps and I am sure the House will welcome a changed approach to the needs of the elderly in next year's budget. The elderly should not be viewed as a problem but as a blessing.

Mr. U. Burke

I wish to share my time with Deputy Coveney and Deputy Clune.

Acting Chairman (Mr. Browne

Carlow-Kilkenny): Is that agreed? Agreed.

Mr. U. Burke

The budget has been called many things, depending on the perspective of the person considering it. To the Government side, it is radical and revolutionary, but I view it differently. It is a budget of contrasts. Similar to the proverbial curate's egg, it is good and bad in places. The tax reductions and the exclusion of the lower paid from the tax bracket have been unanimously welcomed.

Many parts of the budget refer to the elimination of exclusion. However, marginalised people in society have been told that they must wait. At a time of great financial abundance when money is available to Ministers to spend, people have been told they must wait longer. Hospital waiting lists may be improved temporarily but they will inevitably increase because the funding indicated in the budget will not shorten the waiting lists.

I received a telephone call this morning from the relatives of a 77-year-old man. He was told yesterday that he had a serious problem with cataracts and that he would be blind within seven months unless he received treatment. However, when he contacted a consultant in University College Hospital, Galway, he was told that he would join a two year waiting list. What does the budget mean to that person? All he can look to over Christmas is blindness and no treatment for his needs. The budget cannot be viewed as radical, expansionary, revolutionary or in other bland terms since some people have been even more marginalised.

The Minister for the Environment and Local Government outlined his contribution to shortening the housing lists. Some 27,000-30,000 people are on the housing waiting list while there will be only 4,500 new starts in 1999. The others are told they will have to wait. Is that a caring budget? Is that what the Government has decided as the programme for the future? I could identify several other instances of what it means.

What is the position in regard to the 4,000 physically disabled people in Ireland? Some 1,200 of those never leave their homes and the only people they meet are those who call on them. They need appliances but the Government has failed to deliver. The provision of suitable wheelchairs would enable them to go out and meet their friends in the community and be independent. Another 1,200 of that 4,000 need personal assistants to do what we take for granted, to wash, feed and dress them. At a time of financial abundance, the Government has turned its back on them and said they must wait for another day. That is not good enough. Some 1,500 physically handicapped people need simple appliances which would make a enormous difference to their quality of life.

People living in poverty who pay for essential drugs are told that under the drugs refund scheme they must pay more. They do not have the resources. They are ill and in need of constant medication. How can the Government say those people will have to pay more for the essential drugs?

Ireland is suffering the effects of rural depopulation. Poverty in rural Ireland is rampant. What has this budget done for the 27,000 farmers identified as having an income of less than £150 per week? Their income has been cut. What other group would accept a cutback in income, at the rate experienced by the farming community in the past year, without a revolution taking place? In the agriculture sector we could point the finger at many people who are not doing their job. On the issue of cattle prices I wish to highlight the abject failure of CBF during the beef crisis to provide one additional market. It should take up the challenge to go out and sell our beef. I acknowledge the work done by An Bord Bainne in the dairy industry. It has maintained and improved quality and has expanded its market throughout the world while CBF has failed to improve the quality of beef. The reason our beef is rejected by the markets is that CBF has simply done nothing. There must be a review of its contribution to marketing Irish beef. It has sold out to the processors and has been pushed aside. The processors have taken the initiative and that is the reason the quality of Irish beef has deteriorated. Until such time as the Government tackles the area of promotion, An Bord Bia cannot be blamed but it is only nibbling at the edges. Essentially, it has failed to do the job intended for Irish agriculture.

The attempt by the Minister for Finance to provide supplementary welfare to the farming community has failed miserably given that on the day the Government took office the Taoiseach said, when making a contribution on the future for agriculture, he did not favour live exports and that it was a matter of processing at home. The assurance needed to drive agriculture forward was dimmed by the Taoiseach's comments. It was unfortunate.

The budget has marginalised more people and told them to wait for a further three years. Those in education have been told that remedial teaching for those with learning disabilities has been postponed for three years. How can a parent accept that a child in need of remediation will have to wait three years?

Mr. Coveney

Unfortunately many commentators on the budget last week seemed to assess it in a rather superficial way. Snap judgments were made overnight, nearly all of which were based entirely on the income tax package offered. Examining the budget is about assessing the amount of money the State takes from the taxpayer and analysing the services and supports it provides in return. In short we should ask what it does to enhance and protect the overall quality of life for everyone in society.

I welcome the Minister's decision to move towards tax credits by standardising the personal allowances and PAYE allowances. I welcome also the philosophy of widening tax bands to allow people earn more money before entering the tax net. In the past Fine Gael has clearly supported the idea of people being allowed earn up to £120 per week before tax. This budget is moving in this direction. People can now earn £100 per week tax free. This is the first time resources have been available to the Exchequer to allow such expensive reform. The Minister should be congratulated on seizing the opportunity. However I sound a cautionary note. The widening of the standard rate band by £4,000 is seen as a major improvement for many taxpayers. This is not necessarily so because the vast proportion of this £4,000 band widening merely compensates for the standard rating of the personal allowances. In real terms — which is money in one's pocket — a person on an average industrial wage of £15,000 will gain by approximately £6 per week. This is a welcome improvement but not the radical reform many people would lead us to believe. The reform would have been far more noticeable if the Minister's first budget last year had been fairer in its distribution. There is more to assessing the impact on quality of life than tax reform.

It is less than two months since the people of Cork South-Central had the opportunity to identify the issues of greatest concern to them. Members of the Government nor Deputy Dennehy will disagree with me when I say the priority issues outlined were transport and traffic, housing and child care. I am disappointed little has been done to alleviate concerns on any of these issues in Cork or nationally.

The unprecedented increase in house prices in recent years has led to a critical shortage of affordable housing for those who aspire to own their own homes. Home ownership is central to the way we measure our quality of life and to maintaining the sense of community which for years has set our quality of life above that of other countries. Young married couples now face the prospect of paying £100,000 or more for a so-called starter home. Many parents are concerned their children will never have the opportunity of owning their own homes.

First-time buyers must be given an edge over investors in the current economic conditions. The abolition of stamp duty on new houses provided this but the Government had the opportunity to abolish stamp duty on second hand houses in this budget and failed to do so. The expert report commissioned by the Government identified the shortage of serviced land as a key component in the growth of housing availability. In spite of announcing more than £400 million additional spending on budget day, nothing was provided to local authorities to allow them to service additional tracts of housing land. Furthermore, most of the provision in the Estimates is to fund existing major schemes rather than create much needed new ones. No single measure can have a greater impact on increasing new house supply than the urgent funding of local authority initiatives.

Government Members have spoken about wanting to assist those who have not benefited from the so-called economic boom. As social housing waiting lists rise daily, surely this is an area which should have been focused on. It is estimated that 120,000 men, women and children are currently waiting for a house. The Minister did not make any extra provision on budget day for social housing. The Estimates provided for an additional 600 social housing starts in 1999 but this is far too traditional an approach to such an urgent problem. Increasing the number of new housing starts even modestly is expensive and takes too long to provide any relief to the growing numbers on housing lists.

It is particularly disappointing to note a lack of innovation in the Government's approach when Dublin Corporation was recently applauded from all sides for purchasing an entire development which will be partly used to alleviate housing list problems. Other local authorities such as Cork Corporation and County Council are also capable of such initiatives; all they require is funding. It is cold comfort to those on housing lists that at a time when Exchequer finances have never been better, the Government has not displayed any real recognition of the urgent need for social housing.

The growing chaos on our roads at peak times has become an everyday event. In urban areas, the economic costs of traffic delays and inadequate infrastructure have become unacceptable. In the case of Dublin, the explanation offered is that our unprecedented growth rates in recent years have overloaded existing and planned infrastructure. This is not the case in Cork. More than 20 years ago, local authorities and other interested groups had the foresight to commission and act upon a land use and transportation plan. As a result, Cork city and county has now almost completed £300 million worth of road infrastructural improvements. The opening of the Lee tunnel next year will see one of the final key elements of the plan put in place. Economic growth will challenge even this new ring road network. Dual carriageways are of little use at peak times if they are jammed with cars.

During the by-election, I considered options to tackle the problem up-front. It involved investment of approximately £12 million in additional new buses and the provision of park and ride facilities on a year-round basis, not just at Christmas. This would go a long way towards alleviating traffic congestion in the city centre. At the time of the by-election, Deputy O'Flynn accused me of stealing his ideas on traffic plans for Cork so I know he is in agreement with me.

However, we saw no progress on this issue in the budget. In spite of all the promises made by the Government parties in the by-election, nothing has been done. The Minister for Public Enterprise promised to seek EU funding. That is not enough. Everyone knows our days of getting funding from Brussels for everything are over. A sum of £12 million is not a great deal of money to help alleviate the transportation problems of Ireland's second city.

The words ‘child care' are still ringing in my ears from the by-election. That was the area on which the Fianna Fáil candidate focused and we debated it day after day. Child care is not a woman's issue, it is a family issue. As a family issue, it has assumed major importance throughout the country. In some urban areas, the cost and availability of child care is the most significant issue facing parents and young families. If we are to deal with shortages in the labour market and increased participation in it, the issue of child care must be addressed. The quarterly labour force survey published last week revealed that 65,000 of 90,000 new employees were part-time workers. Many of these would probably have been full-time if progress had been made on child care issues. Whether parents must work because of mortgage commitments, by choice or because they are lone parents and need to work, the cost and provision of proper child care is a significant problem for many families and for the maintenance of our economic progress. As recently as six weeks ago during the by-election, people were told how important it was to the quality of people's lives that the child care issue was tackled. Ministers and other Members of the Government parties reiterated the pre-general election promise that tax relief for child care would be delivered on. The concerns expressed by 90,000 people in Cork South-Central are representative of the issues concerning all Irish citizens. This budget did not enhance the quality of people's lives. Of greater concern, it suggests the Government is unaware of the issues of real concern to Irish people.

Ms Clune

I welcome the manner in which the Minister tackled the tax issue through widening the tax bands. This is something I campaigned for during the 1997 general election campaign and it will serve to put more money into people's pockets. However, the Minister fell far short of the mark in a number of areas. There was no major investment in public transport which is the key to the solution of many of our traffic problems. There is a need to reduce emissions, particularly from buses which run on diesel which is a dirty fuel known to cause bronchitis, asthma and other respiratory problems. This aspect has not been addressed. It is known that sitting in traffic jams can cause stress. Steps should have been taken, in co-operation with the Minister for the Environment and Local Government and the Minister for Public Enterprise, to encourage motorists to switch to cleaner and more environmentallyfriendly fuels such as hydrogen, natural gas and liquid petroleum gas on which the duty was reduced by 1.82p per gallon. Capital allowances should have been provided to encourage them to change their vehicles. The rate of VRT should also have been reduced. Motorists will not volunteer to change or convert their vehicles unless it makes economic sense to do so.

It is a major disappointment that the issue of child care has not been addressed. As Deputy Coveney said, there were signs during the Cork by-election that it would be addressed. I am delighted it is now on the agenda as it is an issue that affects all parents, not just women. It also affects employers. IBEC states that there are 70,000 employers looking for staff. Women in the home who wish to return to the workforce have a major part to play. They are an untapped source and should be facilitated.

I spoke yesterday to a woman in Cork who has two children and is on a salary of £12,000. Out of the £200 she brings home each week she has to pay £120 to a child minder. The figure can be as high as £150 in Dublin. She wants to work as she believes she has something to offer. She returns home happier and fulfilled. Her wishes should be respected. Others wish to remain at home with their children. Women account for 50 per cent of the population and should not be lumped in one category. Many are not happy staying at home with their children as they feel unfulfilled and this leads to untold problems in later life. Many have to work for economic reasons.

Something should be done to increase the availability of facilities. Capital allowances will be available only to certain employers. This is discriminatory. Unlike Telecom Éireann, the ESB and from next year Leinster House, many small employers cannot provide cre±che facilities. They should be assisted to avail of facilities in a local kindergarten or creche. Something has be done for parents with large mortgages who are committed to their jobs. No one will take their children. It is disappointing that this issue was not dealt with in a more meaningful way.

Minister for Health and Children (Mr. Cowen)

The budget will make a real difference. The people we represent are educated and know from the past that in bad times one cannot spend one's way out a recession. Equally, in good times there are limits to what can be achieved in a single budget. What is required is a strategic approach where immediate improvement in living standards and services is part of a wider medium-term plan aimed at making progress on seemingly intractable problems. People know about the importance of a clearly thought out set of priorities and financial planning framework for their personal finances. They demand no less where the Exchequer finances are concerned. It can be said with conviction that the most financially astute of households would be happy with the degree to which medium-term financial planning and prioritisation of social objectives underpin the budget.

By providing a degree of certainty over the medium term, the Government enables the wider economy to tap the potential for enterprise and innovation which undoubtedly exists. This is not the only role for Government. The benefits of prosperity must be shared widely to reach the whole community. In shaping a prosperous future with others in a planned way and in securing the benefits for the weakest members of the community the Government is delivering on the promise of good government. The budget will not remove the challenges to be faced or the complexity which people will face in their everyday lives. It will, however, make a real difference to the lives of thousands and in a meaningful way assist them in dealing with these challenges.

For 80,000 taxpayers there will be a real difference when they are removed from the tax net next April. Eight times more workers have been removed from the tax net in this budget than the rainbow coalition Government managed in its pre-election budget. For those on low pay there will be a significant boost with no income tax or PRSI payable on the first £100. Currently a single person begins to pay tax at £79 per week. The priority given to the low-paid means that there will be a clear benefit to the unemployed in availing of job opportunities. The significant increase in the upper income tax threshold will allow many families to keep more of every extra £1 earned. The increase in this threshold for a single person by £4,000 and for a married couple by £8,000 offers considerable extra encouragement to those striving to boost their household resources. In short, the impact of the Minister's tax package will be profound, not just because of its unprecedented size at £581 million but because it is properly targeted at those most in need, namely those on modest incomes and the elderly.

Successive national agreements have laid the foundation for our present prosperity. The tradeoff of modest wage increases in return for significant increases in after-tax income lies at the heart of these agreements. Partnership 2000 provided for personal tax reductions of £900 million over the period 1997-9. This commitment has been more than delivered upon with the reductions included in the budget bringing the total provided in that period to £1,500 million. This is the ideal environment for negotiation of a new agreement with the social partners. It will allow the competitive position of the economy to be secured into the future and will remove the threat of a return to wage inflation.

Tax reform has been talked about for two decades, starting with the tax marches of the late 1970s. The trade union movement and other social groups are now key partners in bringing about radical tax reform and there has been an almost unanimous welcome for the Government's bold move in introducing tax credits. The Government has not yet reached the second year of what I know will be a full five year term. Progress across all fronts has been impressive but no more so than in the reform of our taxation system, which is being overseen by the Minister for Finance. At the end of this term our achievement will be to have used tax credits to transform the tax system and bring about the equity which has been talked about for decades but is at last being fully delivered upon by the Government.

On coming to power the Government recognised that a substantial shortfall exists in the health area in the funding required for a range of services. The budget package of £45.5 million forms the final element in the total resources which will make up the original provision or starting point for 1999. When the revised Estimates are published in January the 1999 figures, compared with the 1998 outturn, will show an increase of 10 per cent in the funding for health, exclusive of hepatitis C payments. This increase represents the average additional resources available to health agencies in planning the services to be delivered from next January. The increase is comparable with the very best years in the history of the health services and it is the true test of the Government's commitment to the health services. The funding provided will represent an increase of approximately £309 million in revenue alone next year.

I wish to specifically mention the areas the Government prioritised in formulating the special budget package of £45.5 million for health and the initiatives that will be put in place as a result. With regard to waiting lists, on taking up office I was concerned to address the delays experienced by public patients in gaining admission to acute hospitals. In 1998 I increased the funding provided for the waiting list initiative by 50 per cent to £12 million. However, I was also concerned to tackle the underlying structural causes of waiting lists, and, to establish these I set up a review group on the waiting list initiative. I have gained Government endorsement for the recommendations of this review group, which were published last week. As a result, in 1999 £20 million will be allocated to tackle inappropriate waiting lists and waiting times in target specialities. This represents an increase of 66 per cent in the funding made available in 1998 for this purpose and is 2.5 times the amount allocated by the previous Government in 1997.

A further £9 million provided in the budget for older people and £2 million for accident and emergency services will be of considerable importance in implementing the recommendations of the waiting list report. The immediate and medium-term recommendations of the report supply the means of reducing waiting lists and, as the funding secured in the budget shows, there will be no delay on my part in implementing them.

As I have mentioned, additional funding of £2 million is being provided in 1999 for accident and emergency services in major acute hospitals. This extra funding will enable the hospitals to implement various initiatives in keeping with the recommendations of the review group on the waiting list initiative. These initiatives include measures to free up beds for emergency admissions through the provision, where appropriate, of alternative step down facilities for patients occupying beds in acute hospitals for lengthy periods. It will also allow for the provision of enhanced staffing levels, the development of rapid diagnostic systems for common emergency presentations, continued development of treatment and observation areas in accident and emergency departments and improved access for general practitioners to urgent specialist opinion. I also expect that part of the extra funding will be allocated to a national public education campaign aimed at increasing general awareness regarding the appropriate use of accident and emergency departments.

One of the side-effects of the inadequacy of community supports and other health facilities for older people is that beds in acute hospitals tend on occasion to be occupied inappropriately. Improving services for older people is a priority in its own right but it will also form a key part of the strategy to better utilise our acute hospitals. An additional £9 million has been provided in the budget for services for older people which, together with the Book of Estimates' figure, brings the total additional allocation for this service to £25 million. This includes provision of £3 million for the 33 per cent increase in the income guidelines for entitlement to medical cards for persons aged 70 years or over.

The Minister of State at my Department, Deputy Moffatt, who will speak shortly, is responsible for delivering on the Government's commitments to older people in An Action Programme for the Millennium. I welcome the fact that the budget means that many more older people will have access to the community supports necessary to allow them to live in their own homes, among their neighbours, with the dignity and respect which they deserve in older age.

On mental handicap, the budget provides additional revenue funding of £12 million for mental handicap services, with a full year cost in 2000 of £18 million. This £12 million is in addition to the £6 million already included in the Estimates for these services in 1999 to meet identified needs in existing services. This brings the total additional revenue funding provided in 1999 for the services to £18 million, with a full year cost of £24 million in 2000. I will also make capital funding of at least £10 million available to support the new service developments for the mental handicap sector in 1999.

The total amount of additional funding allocated by me to the mental handicap services since my appointment will be £53 million at the end of 1999 and £59 million with effect from January 2000. Expenditure by my Department in 1998 on services to persons with a mental handicap amounted to approximately £271 million. With the additional funding which is being provided in 1999, expenditure on these services next year will exceed £290 million. The additional revenue funding of £18 million will provide 320 new residential places, 80 new respite places, 200 new day places, health related support services for children with autism, the continuation of the programme to transfer persons with autism from psychiatric hospitals and other inappropriate placements and additional specialist and other support services.

Nobody should doubt the real difference that this funding will make to the lives of the mentally handicapped and their families. The funding provided for mental handicap underlines the Government's commitment to meet the needs outlined in the Assessment of Need report within the specified time frame. I am proud the Government is meeting the targets set in this document and in the process supporting the heroic efforts of the many families and voluntary groups taking care of a person with a mental handicap.

Funding of £3 million is provided in the budget for physical disability services. This will address identified needs in such areas as respite care, day care, home and personal support services, therapy services including physiotherapy, occupational therapy and speech and language therapy. In addition to this, £6.4 million has already been provided in the Estimates for 1999 to tackle problems in the existing services including additional support for sheltered workshops. An additional £4 million for aids and appliances was included in the Supplementary Estimate for 1998 so that an additional £13.4 million is being provided within a 12 month period for the physical disability services.

The overall thrust of Government policy with regard to people with physical disabilities is to provide the supports necessary to enable them to achieve the maximum degree of independence possible for each individual and, if at all possible, to live in the community. There can be no greater fulfilment for a person with a physical disability than to get their independence back and the funding in the budget is needed to put in place the supports necessary to achieve this.

The budget package for health includes an extra £2 million for child care services. Some £11 million was already provided for in the Estimates, bringing the total additional revenue in 1999 to £13 million. The Minister of State at my Department, Deputy Fahey, is responsible for this area and he has a crucial role in co-ordinating child care initiatives across a number of Departments. As a result of the budget he was in a position last week to announce a £28 million national child care investment strategy.

Debate adjourned.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.